The improvement was particularly driven by recovery in medium and heavy duty truck segment (replacement of ageing fleet) and passenger vehicles (improving consumer confidence and cost of ownership, in the backdrop of lower fuel prices).Updated: August 12, 2015, 12:48 IST

The improvement was particularly driven by recovery in medium and heavy duty truck segment (replacement of ageing fleet) and passenger vehicles (improving consumer confidence and cost of ownership, in the backdrop of lower fuel prices).

However, the overall financial performance of Indian corporate sector failed to improve in the recently concluded fiscal year 2015.

The major contributing factors include the impact of relatively muted pick-up in consumption demand, continued challenges on the execution front in the infrastructure space, severe cut back in Government spending along with an absence of meaningful recovery in capex cycle.

The year 2015 was also marked by sharp correction in global commodity prices, especially for crude oil, whose prices have corrected by almost 42 percent since July 2014 before touching a low of US$ 45/barrel in January 2015.

Most of the oil producing companies and refineries reported sharp drop in their earnings during the year.

Softening demand for steel globally also impacted the prospects of the domestic steel companies as decline in steel prices in the international market exerted pressure on realizations of Indian steel producers.

In ICRA's view, with concerns on slowdown in China rising, the possibility of further correction in commodity prices has increased.

2015 was marked by sharp correction in global commodity prices, especially for crude oil, whose prices have corrected by almost 42 percent since July 2014 before touching a low of US$ 45/barrel in Jan 2015.

Weak earnings growth continued to defer improvement in credit metrics

During 2015, the overall impact on credit metrics on debt heavy entities was fairly muted – also earnings didn’t improve meaningfully to reduce stress. However, the credit ratios improved for Automobile OEMs and Tyres, supported by improving demand and favorable commodity prices.

ICRA expects this trend to continue in the near-term as many of the core sectors continue to face structural issues.

Aggregate margins remained stable

From profitability perspective, the aggregate EBITDA margins of 515 companies in ICRA's sample remained relatively stable during FY 2015.